European Union peacekeepers are due to start deploying to the area in the coming weeks to protect humanitarian operations for around 400,000 Sudanese and Chadian refugees forced from their homes by years of violence.

"The National Army started attacking us at 9:30 (0830 GMT)," said Mahamat Nouri, leader of the Union of Forces for Democracy and Development (UFDD), one of Chad's two main rebel groups.

"We had information that they would attack us, so we were prepared," he told Reuters by satellite phone as fighting continued near the small towns of Forchana and Hadjer Hadid, some 70 km (44 miles) east of Abeche.

UFDD Secretary-General Abakar Tollimi said he was too busy to talk, as gunfire and at least one heavier explosion echoed in the background.

Government officials confirmed there had been clashes in the area on Monday, but gave no information on casualties.

Chad's two biggest rebel movements, the UFDD and the Assembly of Forces for Change (RFC), said on Friday they would break a ceasefire as of Sunday, a month after four rebel groups signed a Libyan-brokered peace deal with Deby's government.

UFDD rebels briefly entered Hadjer Hadid on Saturday and exchanged fire with government forces.

Helicopters from both Chadian government forces and a French military unit based permanently in Abeche took off in pursuit after Saturday's shooting, but failed to track down the rebels, who were driving several vehicles, military sources said.

BORDER TENSION

The government said rebels crossed from Sudan at the weekend and attacked Chadian gendarmes protecting refugee camps.

Communications Minister Hourmadji Moussa Doumgor held Sudan responsible, saying Khartoum's forces had failed in their obligation to prevent rebel raids across the border.

Chad and Sudan have frequently accused each other of sheltering and supporting armed rebel factions.

Forchana and Hadjer Hadid are beside the main road from Abeche to Sudan that passes through the border town of Adre, which has been subjected to repeated violence during two years of armed rebellion in the east against Deby's 17-year rule.

In a further sign of deteriorating security, armed attackers in military fatigues overran an aid compound late on Saturday night in the small town of Kou Kou Angarana, 180 km (110 miles) southwest of Abeche, beating two foreign aid workers. A Chadian guard was was hit in the leg by a bullet.

The European Union plans to send 3,700 troops to eastern Chad and a northeastern part of neighbouring Central African Republic to protect humanitarian operations and complement a joint U.N.-African peacekeeping force planned for Darfur.

The troops, around half from France which already has troops stationed in its former colony Chad, are due to start deploying in the coming weeks, led by an Irish contingent of 400 soldiers.

But force commander Lieutenant-General Patrick Nash warned EU members last week the mission could not go ahead without more helicopters and medical facilities, diplomats in Brussels said.